With the market still eyeing a potential shift to notably chillier temperatures later this month, natural gas futures were up several cents in early trading Wednesday. The February Nymex contract was up 3.0 cents to $2.783/MMBtu at around 8:40 a.m. ET.

NGI Morning Natural Gas Price & Markets Coverage

Prices retreated in Tuesday’s trading as midday weather model runs backed off on the amount of cold expected starting around Jan. 23, an “important period” that markets have been monitoring, according to NatGasWeather.

Overnight the Global Forecast System (GFS) extended milder trends for this time frame, while the European shifted “a touch cooler” to bring the two weather models into better agreement, the firm said.

“Most important, both aren’t quite as cold with the setup Jan. 23-27 compared to what they showed to open the week,” NatGasWeather said. “Then again, the natural gas markets ignored big warmer trends for this week and next week. How will the natural gas markets react today to the GFS agreeing with the European that it had been too cold for Jan. 23-27?”

This period “is still forecast to be chilly,” but “the weather data better not back off any further or it could lead to further disappointment” for markets.

Looking at the technicals, in Tuesday’s session bulls attempted to extend Monday’s rally but ultimately ended the day only slightly higher, observed ICAP Technical Analysis analyst Brian LaRose.

“As a result of their failed attempt to rally, we were left with a big shooting star on the daily candlestick chart,” LaRose said. “Bulls need a rally Wednesday to negate this peaking pattern.”

As for the bears, LaRose pegged support targets at both $2.719 and $2.640. Take out those levels and bears “have a case for a top and a chance to revisit the $2.238 low.”

Analysts at EBW Analytics Group said the February contract tested but failed to break through resistance at $2.90 in Tuesday’s session, reversing following milder trends in the midday weather data.

However, the loss of projected demand in the updated forecasts did not justify the extent of the sell-off, with the decline in prices “driven mostly by the inability to break resistance at $2.90,” according to the EBW analysts, who noted that prices had “partially reversed” early Wednesday.

“The American and European models continue to come into closer agreement, predicting a pattern shift a week from Saturday,” the analysts said. “While the market may trade cautiously for another day or two, if the models hold on to this shift as it rolls closer, sizeable gains are likely for natural gas.”

February crude oil futures were up 33 cents to $53.54/bbl at around 8:40 a.m. ET, while February RBOB gasoline was up about 1.6 cents to $1.5686/gal.